tv Squawk Box CNBC April 30, 2019 6:00am-9:00am EDT
"squawk box" begins right now. ♪ never seems enough for you. >> it was enough for the s&p and nasdaq to set new highs. you do see weakness in the nasdaq today we'll talk more about why in a moment and disappointing reports after the bell from google last night or alphabet. nasdaq right now indicated down by 48 points s&p futures down by 2.5. the dow feet are indicated up. they're up by almost 25 points this morning overnight in asia, japan's markets continue to be closed for a public holiday as the emperor steps down and the crown
prince takes over. elsewhere, you can see that the hang seng off by plt 6%. shanghai composite up by half a percent, and then stocks in korea with the kospi down by .6% as well. in europe this morning with some of the early trading that's taking place, you are going to see that it's a mixed picture. the biggest weakness is coming from the cac in france at least among the three major averages stocks in spain also a little weaker they're down by .6%. stocks are slightly up in italy. google reporting first quarter earnings >> it beat wall street estimates and forecasts. revenue fell short of the market due it a slowdown in advertising growth it poses its slowest growth in four years it faces more competition and has continued struggles.
i add youtube that is estimated to account for -- that stock in the premarket right now. down off about 7.5% this morning. we're going to talk a lot more about google or i should say alphabet throughout the program. >> that was after closing at a new all-time high. you know, it's like i'm so happy at 90 points because you think of google in terms of advertising and how it's unstoppable how do you stumble >> i wouldn't even describe it as a stumble it's the -- it's what -- >> they have body language from the company. they don't think they figure it out. >> the company itself maybe a little surprised, though, by the analyst -- the street's reaction, too. >> trade update. treasury secretary steven mnuchin kicking off a new round of talks
he said negotiators hope to make substantial progress at this meeting as well as the talks scheduled for next week in washington the white house is standing behind president trump's pick for the fed board of governors larry kudlow told reports reporters that the vetting process is underway for steven moore and they were still behind it there was a piece yesterday where apparently the white house is going back and looking at a lot of he's writings from years ago. >> they were going through -- her endorsement was a little less warm. larry kudlow came out afterwards and game more of a hardy endorsement. >> the whole group of people and names that don't like him because he is a wall street journal editorial board titan. he is a thinker, then they would
call him in a nice way they would call him a right-wing extremist. >> that's what i wonder whether -- are they talking about the stuff that he says we -- >> there was stuff he wrote for the national review, i read more of it last night i don't know we'll have to ask him about some of these things. there were some things that he said that were attempts at humor that fell flat >> i know about that >> there were things that i read last night that i don't know >> aquaman >> aquaman >> not only that every day. i throw a lot against the wall, and -- >> we'll talk to him about it. i think there's a lot of people, by the way, on both sides of the aisle who feel uncomfortable with him >> for policy do you feel uncomfortable with policy-wise
or politically correct-wise? >> not even politically correct. >> what wise >> we'll go through the list because we're going to talk to him about some of the things -- >> you have your questions you got that ready to go you got your gotcha. did you get this stuff ready so you have the soundbyte, andrew ross you got the actual soundbytes ready from that interview or not? order them up. >> i conduct the interviews. why would i -- >> it would help the gotcha question.
companies will be rorgtd this week >> let's get to our guest host this morning are chairman ask ceo, she's also on the board of costco, hp enterprise and lite, among others she's here early >> i am. especially for someone from the west coast >> i just should have pulled an all-nighter last night >> do you want to weigh in do you have a view on mr. moore? >> he saw you nodding a little, so he thinks he might have an ally >> because she's sentient and sane >> he is controversial he has some things in his past that people have shook their heads over, and he is in the spotlight. you are going to have both pros and cons talked about. >> i didn't know about any of the things which things are you talking about? >> well, i think some of the issues that he has made comments about women. >> all right that's what we're talking about. i just don't know whether we're talking about whether he is too hawkish, too dovish.
whether he thought that maybe he is anti-fed. any of these policy things i think are fair game. i don't know what he thinks. a lot of people did crazy stuff in -- >> i don't disagree, and i do think that you have to focus on where is he going to add value or not the way he got on the radar screen, you can talk about a conversation you can have -- can i finish he can have that conversation where he said something very negative about jay powell and the fed and how it was -- what did he say it was like weapons of mass -- i don't know he made some crazy analogy about what the fed did in december, which some people would agree with he said it in a hyperbolic way, and that's what got him on trump's radar. is that how you pick a fed, someone that you put on the fed? i don't know is he an academic?
is that a bad thing if he -- >> jay powell is not -- you can have a lot of different people we had a guest last week who was saying, deano, who was saying, look, you can have a lot of different backgrounds of people who do this. i think that he has written things more recently that i didn't know about. i just had been reading some of them the whied that he thinks child labor laws should be abolished maybe he was joking. i wanted to ask him about that he also wrote recently about five years ago in a column that he doesn't know how he feels about women being breadwinners these are things he wrote in the national review that i had not seen before. >> we'll get out of the steven moore moras and talk to him later. >> in other words, he will be back >> he will be back >> he will be on the program, and we can ask him these questions directly
there will be a lot of questions about all sorts of -- about lyft and what's happened to his share prierks about the uber ipo that's coming. we just reported yesterday wework is coming in terms of ipos that are on board here. were you surprised at what's happened with stock prices >> actually, i don't try to predict stock price at all i think about companies and their futures and i think the company is absolutely doing the right thing. their heads are down, and they're focused on the operations of the business and delivering for customers and improving their service. transportation as a service, and lite is the first one to go public, and to -- it's a brand new category there's a lot of investors that don't really know what that category is going to mean.
>> i think it's totally a success. the reason -- >> do you think the pricing is a success? if you are an investor, you're not a happy person >> it depends how long of an investor you are, and if you want to flip it immediately, that's a different story i think we priced it right, and i think we had very good momentum for the ipo we raised the appropriate money that we were looking to do to help keep the company healthy. we look at this as a marathon. it's not a sprint. >> let me ask you a question when you look at the price of pinterest or look at the price of zoom after their ipo, went up 80%. do you look at that as a success or failure they both can't be a success >> that's not true they are both successes in different ways we are a different business model. we have thousands and thousands
of drivers. will you find that we priced appropriately, and it will be a good outcome for our investors >> your point is the right one, and it's a long haul if you are a long-term investor, it's a marathon. do you own shares? >> yes i do >> and you plan on holding them absolutely well past the lock-updates >> absolutely. >> one of the things people question about ride-sharing. it applies to lyft and uber as well what is the ultimate path to profitabili profitability? nobody talks about profitability, neither company, fundamentally says in the next three years that there's a target date on when we're going to become profitable how do you think investors should really think about that
have you to reinvest money in the business to have it continue to grow. when be you are in a land grab environment like we are, and we have been number two in the marketplace in terms of our position, we have to invest. we have to be fiduciariefiducia. i looked at the numbers all the time, and i worked with the teams all the time, and i think they are doing the right things to manage their cost, to have the visibility as to where they're headed, to do it right, and to make sure they take great care of customers and build that loyalty. >> maybe lyft is one of the points that you can put on the map in terms of how you are thinking about the economy right now.
cities are really crowded. people are thinking differently about their cars there's a lot of people that drive for lyft that this is a second income for them we li in a country that's very safe compared to how it used to be there's a moray that allows people to get into cars with others that they don't necessarily know we do a lot of vetting on that to make sure that those are safe rides. i do think this paradigm shift has really been an opportunity for lyft to capitalize on that and to really provide services that make a big difference >> we're getting a lot more from maggie thank you. >> yes when we return, the fed kicking off a two-day meeting today. investors will be watching
>> how will the central bank respond? joining us right now is dwight scott. he is blackstone's senior managing director and president of gso, which is blackstone's credit arm thanks for being here. >> glad to be here thanks for having me >> the fed has been probably the most important factor in the market for years at this point >> we were concerned about rising rates and what it would do for credit. with the move by the fed in march and then again e again later in the year and likely what's going to come out of the next couple of days, it really puts a good base under the credit markets.
minimum more activity on the buy-out side >> that's really interesting one of the markets we focused in is energy, and we do have a big energy battle that's taking place right now with anadarko. we have two different companies that are buying to see what they do with that do you think that's a result, or do you think that's the result of other things that had already been there higher energy prices. >> would i like to think the fed can help energy. i'm not sure they can. energy is a difficult market right now. what are you seeing with anadarko is more the consolidation that you need to make that business work.
lower prices -- today it's 5%. it's 20% of the energy names in high yield trade, 1,000 basis points 20%. that's versus the market that has an average of 7% the energy is struggling right now. it's both performance-related and capital-related. the markets have moved away from the energy companies they don't want to give them capital. it's a difficult place to -- >> the credit cycle, though. do you think there's a bubble?
you know what congress is going to do. why don't we mmt a couple of trillion in infrastructure right now? if this is the environment we're going to be in. >> i'm not the right one to comment on mmt, but i will say in our world if you look at the thing that drives success in our investments is generally growth. we don't need significant growth we just need the companies not to fail. we're lending at 50% loan to value and so if the company
maintains value, we're going to be fine. in a world where there's little inflation, low rates, good growth, economic growth may not be 3.2%, but it looks relatively robust let's keep it going. >> talk a little bit about leverage and covenants what do you see in that area >> well, the mark has grown from a $800 billion market ten years ago it a $1.2 trillion market. significant growth in that market it is still a $1.2 trillion market not a huge market. high yield market is glars 1.5 trillion in the u.s. the leverage on markets moved in that direction we're always worried about the bottom falling out it's the nature of the job we worry
if we could see the capital structure, which is where the leverage owned market is, we could be floating rates, and we don't have to spend a lot of time worrying about the fed turning and going in the other direction. we can generally lend that money against an lbo where there's significant equity coming in below us that feels like a pretty good place to be, and it doesn't f l feel -- >> given the central bankers over the last five years, for you not to immediately say we're in a credit bubble -- >> once again, you know, six or nine months ago we were really thinking about that we were moving out of fixed income we were worried about rates going up and worried about the economy starting to turn today it's 5.5 times last year was a great earnings year we were starting off slow. still, it helped the process a
lot. >> you can't even underestimate the ripple effects you know what i'm saying we are going to grow 2%. there's a lot of this. >> especially growth and cost pressure i mean, the combination of those two things are very strong we hear a lot of leverage loan market it doesn't feel like those pressures are there. >> then they might have. >> thank you very much for coming in today. >> thanks for having me. >> really appreciate it. thanks for being here. >> coming up, it's a -- he is in studio, too. it's a busy day and a busy hour for corporate recoport carts we're expecting eli lily and merck and pfizer all to report before 7:00 a.m. "squawk x"ombo cing right back [leaf blower]
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revenues was 26.2 billion, which is below, i believe, what the street is looking for at about 27 or so 26.2 is that total revenue? >> total revenue of 27 points. >> maybe that's not -- i saw another number that had 26.2 there's progress being made according to larry we saw progress in the first quarter. we continue to execute our priorities to improve our financial position we announce the sale, you might recall, of biopharma closed the web tech merger settled wmc, and improved our operating performance. we delivered strong industrial orders in the quarter. up 9% organically. back on 374 billion, which was up 6%.
out at me. the adjusted ets numbers, the expectations were for 9 cents. one is the performance of the power sector for the last couple of years i think the street was modelling a loss of over $200 million for that segment it actually looks as though the segment posted very slight profits. that's better than people were expecting. the other big issue with the company is the balance sheet the actually a cash burn of $3 billion, and it looks like the adjusted industrial free cash flow was negative 1.2. it's coming in significantly higher >> still looking at $2 billion
negative cash flow like the company didn't have enough problems. the 737 max grounding is a new risk for us. we are actively monitoring the situation. that's in their outlook for 2019 they saw fit to mention the 737 max air. >> it's ain't surprise that if that is grounded, there could be some impact in the near term.
the fact that they are coming out and reaffirming guidance and while the quarter is not a good number on an absolute basis, but they seem to have a grasp around what's going on, and that's maybe -- sflo what the management team told the market is 2019 is not going to be a good year from the numbers perspective, but they're
$2.32. are you long-term holders, or would you look at this and say we're going to declare victory and get out? >> not even close to declaring viktsry to get out we are very long-term focused investors in general that's our strategy. we tend to invest with a five-year look into the future as to how he we think it will perform. >> this guy, he is going to see these numbers today. he is still talking about testing some of the lows do you think that this will cause him -- you don't need to speak for him, but is this a strong enough performance where he starts to question his bear case at this point >> it's -- i have a tremendous amount of respect for steven it's not really my place to speculate as to what he may or may not think, but -- >> it sounds like reading between the lines you're saying this is showing signs of turning around >> i think it's showing signs of stability. wung thing i admire about steve is he will take a close and
detailed look over the next kch days, as will everybody else on wall street. we'll see what comes out once we dig a little deeper. >> the company has said 2019 will be some of the worst. the numbers for this year are interesting to look at nobody should be investing in the stock because they think 2019 will be a good year particularlien the first quarter of 2019.
it's a long business really, if you are investing in this stock, it should be because you think there is material earnings power once they get past some of the issues that have been running through their financial firm from -- >> we have earnings news to bring you in addition to ge. eli lily is reporting 2 cents better than analysts had expected revenue fell short of expectations to look at the stock up just 2% right now we're extending numbers for merck and pfizer in just a couple of minutes. we'll keep our eye on that and bring it to you as soon as it hits the weerz >> coming up, we're going to talk to the ceo of the company behind the wifi in new york subways. and future plans to expand it. sfx: [phone ringing]
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sfleefrmt our next guest in the new york city subway system and included more than 160 miles of fiberoptic cable to support wifi and cell service in the city's more than 200 subway stations. we want to welcome melinda white from transit wireless. good morning >> good morning. >> thank you for bringing wireless to our humble little
subways and elsewhere. can we talk a second about the challenge of doing something like that and sort of how scaleable this is to public places i assume this was not an easy task >> it was extremely complex. it cost 283 platforms. we were able to complete that project by the end of 2016 actually two years ahead of plan we have an incredibly knowledgeable group of people and, yes, it is scaleable. that's part of the good news as we think about now extending that infrastructure so that new york city subway riders can have connectivity all the way through -- >> one of the things that i was thinking about, and i have to plead ignorance on this, is you guys are using effectively shared transponders. anybody can share this is that a larger model >> it is a larger model.
it's actually -- we built the network. we operate the network, and then our mobile carriers put their antenna systems on so that all four national carriers are available to their customers in the underground new york city subway >> so it gives everybody a choice >> everyone has choice we also have a wi-fi network in case they want to be on public wi-fi. it's free. we also built a public safety network where the help points reside >> go ahead. >> i was just going to say, as you see traffic increase, subways are busy, they're crowded. you have your peak and low times. how do you deal with the capacity issues? >> the same way that we deal with it even outside of the subway, right? we understand what dense fiction means. our mobile carriers are on top of their coverage capacity needs
under ground, and we have the types of direction of antennas so we can handle capacity and consumption. >> if you could, on two big sort of hot button issues right now one is the competitive issues. you talked about four competitors that are under ground with everybody right now. there's conversation about those four turning into three and whether that's a good thing, and then i want to talk about 5g and what you think -- >> i was going to ask about that, too. it's good. >> on the issue of sprint, t mobile coming together, a good thing for the public a bad thing for the public >> i this i that, you know, it can be both. that's probably a bit of a cop-out on the answer, but who knows what's going to happen there. i think for the consumers, for their customers, it will be no disruption at all in their service. >> maggie, do you have a view on that, by the way this is your world >> you know, i think it's going to be a positive >> it's going to be a positive >> it strengthens a third
player it actually brings some great network capacity capability in the united states. >> creates more competition. lower prices, better for the customer >> and more aggressive >> if it doesn't happen, what happens to sprint and t-mobile >> that's a really good question >> well, and here's a public policy question. if, for example, people say sprint could run into some serious trouble, meaning into a very bad place, but there's an argument to be made that even if they went to a bad place, like we went even talk about that bad place, that someone could come in and try to buy for very little or buy up the debt for very little and then reinvest in it and create an even stronger competitor from a public policy perspective, there's a question about, yes, put them together because that might help the customer, but also, if you let them go and stay apart, would that create more competition long-term? these are sort of very difficult questions. >> they could also become private carriers for specific
companies as well with that use a lot of capacity in terms of how they run their businesses. there are other buyers and other outlets for that capacity. i think bringing them together actually is a good check and balfour the system 5g -- >> how far away are we for real? >> well, it's happening now in small pockets, and 5g light technologies are happening now there's a lot to do. it's a mass deployment >> how long will it take to have 5g in the subways? will it ever work? >> it's ready for 5g the mobile carriers are doing their work to insure that what they put on that network is real, but you have also got to get a device in the hands of users. it's -- i think -- i don't want to be the who is dpg to say when it's probably, though, in progress and we'll start to see more and more of it visible in the near >> how about this model in other markets, melinda can you expand this to other cities >> yes
we are designers we're builders we focus on transit operations you think about trains, subways, buses all across the united states communication networks are needed >> melinda, thank you for coming in this morning. we appreciate it >> more arguments. >> a couple of dow components definitely fiedser and merck are both -- let's talk about pfizer to me. i don't know why i do not take lipitor. no, i'm not familiar with that i don't know what you are saying i do not take lipitor. thank you. >> i wasn't saying lipitor >> okay. whatever let's move -- >> you are one of the few people who doesn't take it. >> i love maggie 85 cents a share was 10 cents above expectations on better than expected revenue as well. the estimate was 12.9 for revenue, and i think the company had a little bit above that at 13.1 for the year. the street for revenue was
looking for 53.2 and pfizer was forecasting 52 to 54 then for adjusted earnings per share for the year, the company is forecasting 283 to 293. 289 is where 283 to 293. $2.89 is where the street is, but they beat by 10 cents. so they're not saying $2.99. they're saying $2.83 to $2.93. so i don't know whether they think they're going to continue to beat every quarter by 10 cents, which was a pretty good beat in this case. 3.6% yield still on the stock. and then they have a current remaining share repurchase authorization of $5.3 billion. i guess they've done $8.9 billion in the first quarter >> all right, that stock is up by 1%. let's take a look at shares of merck, which are also trading higher after it, too, is beating earnings expectations this morning. merck came in at an adjusted
level of $1.22 a share the street was only looking for $1.02, so that's a beat. sales stronger than expected, $10.8 billion versus the $10.4 billion the street expected. raising guidance as well it is looking for $4.67 to $4.79 a share. the street was the at the very low end of that at $4.68 pharmaceuticals kael sales up 8% to $9.66 billion, kee truda sales up to $2.27 billion. gardasil up 27 cents to $838 million. they do say that the revenue view -- their sales were up 11%, if you excluded the negative impact from forex. so obviously, the strong dollar impacting this, but merck shares are up 2.75% this morning. both dow components up handily after beating expectations. >> you know, ken frasier is a really smart ceo he's making a lot of right moves and has also done a lot to acquire in biotech immune, which is another hot area for them. >> right again, though, check it out. the stock's up by about $2.10.
okay, coming up, we've got much more on the big pharmaceutical companies reporting results this morning you can see three of them moving this morning we'll wrap up those results for you next then we have even more results from a handful of other big companies, in just a moment. back in a bit. this isn't some dealership test drive around the block. it's better. this is seven days to put your carvana car to the test and see if it fits your life. load it up with a week's worth of groceries. take the kiddos out for ice cream. check that it has enough wiggle room in your garage. you get the time to make sure you love it. and on the 6th day, we'll reach out and make sure everything's amazing. if so... excellent. if not, swap it out for another or return it for a refund. it's that simple. because at carvana, your car happiness is what makes us happy.
quarterly results just out from the big three pharma companies -- merck, pfizer and eli lilly. let's get to meg tirrell at headquarters for reaction. meg. >> you're back you're back! yay! >> hello. >> that is you good morning. >> good morning. great to see you guys. a lot of earnings out this morning. starting with eli lilly, it was a mixed quarter and you can see that, trading down a little bit there, having missed on revenue. contributing to that miss, you can see their cancer drum came in a little bit light along with a couple diabetes drugs coming in a little bit under estimates there. during the quarter, of course, the company completed its acquisition of loxo oncology, a
hot biotech company with an exciting cancer drug so people will be listening to hear about plans for that as well as any further plans, potentially, for m&a, of course. moving along to pfizer, that one coming in beat and a raise for a a lot of people will be looking for a change in strategy he has been with the company for a long time, so maybe not expecting major changes. pfizer did $8.9 billion in stock buybacks in the quarter and have another $5 billion in share repurchases authorized, so spending a lot of cash there, but everybody's always wondering about m&a for them merck coming in a beat as well, as you detailed earlier. they're setting growth in oncology and vaccines there. and oncology, of course, their major drug is ketruna, that immunotherapy cancer drug, at $2.27 billion, slightly less that what analysts were looking for, but the stock is up 2.7% in the early market one more thing to note on merck -- they make the mma
vaccine, the measles, mumps and rubella vaccine, and cited growth for their pediatric vaccine business because of higher demand in the u.s. and in europe so we'll see whether that continues with the current outbreak, guys becky? >> meg, thank you very much. i am dying to see baby pictures. we're short on time right now. too much news. but we're so glad you're back. >> thank you. >> we've missed you terribly and next time you're on, you're bringing baby pictures. >> of course. >> meg tirrell when we return, earnings scorecard. today marks the halfway report for earnings season. how things look so far and later, we'll talk to the analyst who called lyft's ret'ri aand pinteress send mo on uber news. order. millionth order. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪
it's halftime for earnings saernsion but that doesn't mean we're taking a break ge, eli lilly, pfizer, merck already reporting. mcdonald's and general motors on deck this morning. and apple makes its big splash after the bell. >> when i look at the long-term health of the company, it has never been better. the white house standing behind stephen moore, president trump's pick for the fed's board will talk to us about the controversy surrounding some of his past writings, some of his remarks. plus, his read on the state of the economy and what the fed should do right now. uber's ipo road. drivers get ratings, passengers get ratings. >> a one you're giving me a one honestly. >> i don't like the way you
spoke to me. >> but how will the stock rate for investors following the debut of lyft and pinterest? the second hour of "squawk box" begins right now ♪ oh, we're halfway there, oh-oh, living on a prayer ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ good morning, everybody! welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. our guest host this hour is maggie willed rotter, former ceo of frontier communications, and she's on the boards of costco, hp enterprise and lyft, among many others. maggie, it's great having you here today and we have a lot more to dig into with you this hour. >> it is a busy morning. >> it is lots of earnings. meantime, the fed kicks off a two-day meeting and u.s. equities at this hour have been indicated higher, at least for the dow, indicated up about 28 points you're still looking at a little bit of weakness for the s&p,
which is down almost two points, and then the nasdaq, which is off by 45 because of weakness in alphabet shares last night we had two dow components already reporting this morning, beating expectations, both merck and pfizer, and that's giving a little bit of help to the dow this morning also, the ten-year note this morning, yield looking just above 2.5% 2.534%. okay, got some headlines to bring you this hour. let's tell you what's going on treasury secretary steven mnuchin kicking off a new round of talks speaking to reporters in beijing, he said they hope to make substantial progress at this meeting and the one next week in washington separately, the we company has filed to go public, joining a growing group of those going public there is no timeline for going public we are going to be talking more about the hot ipo market later this half hour we should say, we work actually filed that form back in december and then filed an amendment just last week. so, this has actually been going
on for much longer than people think and actually was even happening during that negotiation with softbank, if you remember that. we'll talk more about that later. anyway, the alphabet company, parent company of google, reporting first-quarter earnings that beat wall street forecasts, but -- and this is what's weighing on the stock this morning -- revenue fell short of the mark due to a slowdown in advertising growth, and that is taking a bit of a bite out of that stock this morning, off now about 8%. >> so, your take is that it was the analysts that just were too -- there was really nothing wrong with the report itself, that the analysts were just missed the call on google? i didn't understand that. >> i think nothing's black and white. i think it's a little bit of both on this. >> what if traders -- >> i think it's a little bit slower than -- >> what are traders and investors thinking if it's not $100 >> it's a problem. >> okay, so it's not just the analysts >> i was trying to explain -- >> what do you think is going on with google, exactly what do you think caused it to -- you really didn't like to characterize it as a stumble,
but something was below expect -- is there some change occurring to their business model, maggie? >> yes, i think that the advertising business has more competition than it's had before, so some stronger players. i also think that youtube's been an issue for them. >> monetizing -- >> monetizing youtube, also the content issues there's some content -- >> questions about what's going to be allowed from here on out, too. >> exactly, exactly. >> what type of regulation -- >> so i think some revamp. >> okay. all right, we have even more earnings to tell you about right now. pfizer and merck reporting just moments ago pfizer earned 85 cents a share, a dime ahead of expectations revenue also higher. and the companies, they are rising their full-year 2019 guidance and merck, they are also beating the street with $1.22 a share. revenue also topped estimates, coming in at $10.8 billion and general electric reporting adjusted rofts of 13 cents a share, 4 cents ahead of expectations revenue was also above a little bit, $27.2 billion that also beat estimates we are just getting warmed up for today's lineup of earnings
report, and dom chu actually makes the effort to show up for "fast money," so he can actually be in studio but usually -- >> well, so did you, joe i mean, to be fair if you were going to be there, then i should be there i didn't have an excuse as being an early-morning person, having to stick around for "fast money," if you were going to do it yourself as well. >> did you hear the place erupted when you walked in it must have felt good. >> it felt good because i have involvement with that show on a quasi-normal basis, but i'm never there, always in englewood cliffs. >> or quasi-normal -- >> no, especially not when you're calling me out offset -- >> i know, they panicked because you didn't have a mike on. relax. we did have an hour, though. >> yes, we did have an hour. let's talk about where we are in terms of the overall picture, because like you said, and berky and maggie alluded to it, it's a busy morning because we've got a lot going on you mentioned the dow components, you mentioned the other stocks already reporting remember, 150 s&p 500 companies this week. and as things stand right now, just about through the halfway
mark, data from refingerpriitiv, which tracks earnings, says if things come in as expected for the next half of earnings, we will see a decline, to becky's point earlier this week, of about 0.2% on earnings, also a 5% gain in revenues overall. so that's how things stack up. but remember, we're still waiting on mcdonald's. we're still waiting on general motors, and we're still waiting on apple and i want to take a look at just how these stocks have performed. if you look at the overall picture, we're going to put up some one-year charts up here, just to give you an idea of perspective. mcdonald's shares, by the way, hovering near all-time highs that stock is slated to come out with earnings later on this morning. you can see they're up about 17% over the past one-year period, closer to 8:00 a.m also another stock to watch, general motors that stock also reporting closer to around 8:00 a.m. today, and those shares are up about 8% over the last one-year period. but again, still having to try to find some momentum in autos and then we'll end on one big company, of course, one of the
biggest ones out there, apple. closer to 4:30 this afternoon. but it will be a key focus, guys, for a lot of traders out there, especially when it comes to teams developing in technology apple shares not yet at their all-time highs, but still about 23% higher for the past one-year period those are the three stocks a lot of traders will be paying, joe, close attention to as we head into the 8:00 a.m. hour, and of course, after the closing bell. >> we're not going see an earnings recession, though, right? you said we could see adecline of 0.2%. that's only if all of the rest of earnings meet expectations -- >> correct. >> don't beat them like we've been doing to this point. >> remember, the last time we broached that discussion, we were talking about earnings being down about 1%-plus at that stage -- >> i've written that off i don't think there's any way earnings are going to come in and we're going to see a decline in earnings just based on how many have already beat to this point, how much better things have been than had been anticipated. >> remember, it only took about 30 reports in the s&p 500 to swing it to a neutral, or a 0% gain -- >> right like, we can look at these numbers. i don't think there's any way
that you're going to see an earnings recession this quarter. >> and it's not just that, too remember, the expectations -- i mean, that aside the earnings growth year over year is what it is that is ex-analyst discussion whatever yts. >> right. >> but the expectations were already so low going into this i mean, they had been coming down since probably october of last year, the ratcheting down of expectations for this particular quarter so, i mean, things are looking pretty decent right now. revenue growth is still there, albeit mid-single digits that's not great, but it's not bad. it's certainly not recessionary. >> dom, if we do flat, after really tough comps, and you do flat, that's something to remember and who cares what the analysts are saying if you don't have a down quarter after the big gains that we saw year over year last year, i mean, that is significant. some people, dom, are -- we're halfway through -- some people are half full, like becky. others are half empty. and in this case, we may end up up a little bit. santoli might know don't you think we might end up with -- i'm going to introduce
him, dom, can i do that? >> you want to introduce him first, then we'll know he's there. >> yeah, otherwise, then i won't throw him off like i did you sirat is here as well. douglas lane is not here >> not here. >> but you work at douglas lane and associates you're also a cnbc contributor, more importantly and mike santoli, cnbc senior markets commentator. is there an over and under, up 1% is that the over and under >> i think up 1% is basically consistent with the rate of beats we've gotten i also think it doesn't really matter hardly at all. >> okay. >> okay? we're around flat. you're letting companies kind of grade themselves, right? because the estimates got so low, we're talking about adjusted and operating and all the rest of it companies beat earnings. that's what they do for a living and i think that -- >> they beat estimates, but they don't necessarily go up year over year. >> not always, no. >> are you saying they're doing some adjusting to go up year over year? >> no. no. >> okay. >> i think it's about flat. >> okay. >> and i think in a 4% to 6% nominal gdp growth world, they have revenue growth, and they
should be able to make the numbers, unless something else goes wrong so, i also think, you have to keep in mind, the apple effect is massive on s&p aggregate earnings. >> that's true. >> they have a big year over year decline in net income climbing they're including the facebook charge as part of earnings for this quarter. >> that is true, yes. >> so look, it's all a little bit of a parlor game. >> right. >> i think the bottom line, though, as you said, is holding earnings at a very high level. the market, though, since the beginning of earnings season, the s&p's up about 2%, right so, the market has kind of figured this out halfway through. if you don't beat, it's going to be an issue. to me what's most interesting today is the reaction to alphabet in other stocks in other words, is it going to just be an alphabet punishment today as it looks right now? or would it spread to the other big-growth names, the advertiser-supported companies it's not happening right now and i think looking at how the nasdaq performs over the course of the day will tell you whether people are using it as an excuse to cash in for this earnings season. >> sirat, you can talk about earnings, but also a lot of indices are at new highs
a lot of times, things that are at new highs hit new highs same thing versus new lows new highs aren't necessarily a bad thing. >> no, they're not, and you've got the momentum behind earnings season now, too. and to mike's point, it's not just earnings, but revenue also. and i think companies that will produce top-line revenue growth that's better than expectations are going to get rewarded, because that's where you're going to get the operating leverage now because cost cutting's been going through people have actually sandbagged earnings but companies that are going to grow in a slow growth environment, and the reason we can talk about that is because the feds basically say we're not going to go anywhere so with a low-interest rate environment, you want companies that be grow top line and have that leverage going forward. and i think alphabet got punished, because if revenue's coming down, expenses are going up, it's what facebook went through about four quarters ago. so i think that could be an isolated issue, but the rest is where do we want to put our money, what sectors are going to actually have top-line growth as opposed to just kind of plodding along. >> we have some good, better wage gains, right? but inflation itself seems to be
somewhat quiet at this point, maybe it can -- you know, maybe it can come up quickly. normally, it doesn't, though so, eventually, do you worry about the wage gains impacting margins -- >> i think countervailing forces, yes. wages are improving, but you've got so much efficiency in our system in terms of just technology and if you get this trade war actually settled, input prices are going to come down so, i think that offsets each other. and if we get an environment, kind of the goldilocks scenario of low interest rates, fed on the sideline, and then you can get this kind of up side. >> what about the alternative, not the goldilocks scenario, but a situation where we don't get a china trade deal and where nafta doesn't get passed, because you now have democrats in congress who are talking about pelosi not even bringing it up to a vote unless changes are made to it at this point. >> at that point, then you have to relook at where you want to be invested, because that's where the industrial and consumer sectors start getting hurt because the baked in
expectations of earnings growth -- >> are done. >> right so this is all kind of baked in. and -- w surprised over the weekend to read that, that democrats are now talking about not even bringing it for a vote. >> right so, if you look at plirlly, that's kind of a way for them to kind of bring some noise into basically a straight line up since january. and i think that could be one of the things that if you're concerned about a pullback in the market, maybe short term, but that's a scenario i think one needs to watch for. >> by the way, the wage gains is one reason why small caps have been underperforming, so it's a matter of who really gets hurt most immediately when wages are going up and they can't pass it. >> and it's in certain areas, too. >> certain industries, yeah. health care is a low productivity sector. >> do you watch this show? >> yeah, sure. >> did you see jim paulsen on yesterday? >> i didn't catch jim. >> did you hear what he said about the s&p? >> no. >> 3,400 so, i say that to you and you didn't freak out >> no. >> you didn't start twitching. you didn't -- that's not out of
the question >> well, nothing's out of the question. >> no one's saying 3,400. >> no, few people are. the convention is 3,150. >> he said 3,400 yesterday >> okay. he's been right. >> i just wanted to see your reaction you gave me nothing. all right, thank you sirat, did you move when i said that you reacted. >> i did >> yeah, okay. >> he laughed. >> his toe twitched. coming up when we return on "squawk," what kind of ratings should uber's ipo get before its debut? we have that coming up. plus, president trump's pick for the fed board, stephen moore is going to be our very special guest coming up in the next half hour lots of questions for mr. moore this morning we will bring you that interview -- >> mr. moore. >> just a moment. y'r uoh >>oue watching "squawk box."
welcome back to "squawk box," everybody. the futures this morning have been a mixed picture dow's been indicated higher. it's been helped by some dow components that have reported a beat expectations. merck and pfizer both stronger than had been anticipated and raising their guidance for the year dow futures right now indicated up by almost 30 points s&p futures down by just over two points
and the nasdaq off by about 47 nasdaq's being influenced in large part by alphabet, which came out with earnings after the bell last night that were in line with expectations, but there were some numbersthat th street didn't like within that revenue from ads -- or ad revenue coming in a little lower than expected, and that's put some pressure on the stock that stock's down pretty sharply. also, results just in from conocophillips the multinational energy company reporting earnings of $1 a share, 10 cents better than expected revenue came in about $1 billion higher than expected, too, and that stock is up by about 1.33%. coming up, the uber road show heading back to the big apple, but will this highly anticipated ipo make the grade with investors we're going to take a look at how it could stack up against rival lyft we have a board member from lyft right here another unicorn getting ready to make the public plunge, the we company, formerly known as we works. we've got the details on that upcoming ipo as well
what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives.
so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. welcome back, everybody. we company, formerly known as we work, has filed confidentially to go public, joining a growing group of technology companies that have filed this year. ceo adam neumann telling
employees monday in a memo that "we have regularly focused on how to take our business to the next level in every aspect." we initially submitted its s-1 with the securities and exchange commission before softbank made a $2 billion investment in the co-working company, bringing softbank's total investment to $10.5 billion. we work did not disclose a timeline for going public. all right, the uber road show pulls into new york city today. our leslie picker, she's so excited. joins us now with what's next for the ride-sharing -- i can feel it. >> so excited. >> it's palpable. >> yeah. >> making me excited. >> well, they're here in the city, right now. >> making me excited. >> you know, uber's been in the city for a long time hate to tell you. >> that's true i see them driving around all the time but they are back in new york today, ahead of what is likely to be the biggest meeting of their road show. hundreds of investors are expected to show up for a lunch today to watch the executives present, but the company is being quite cagey about the meetings, especially compared with other ipos that we've
covered. investors were sent effectively a save the date on friday and told that details for today's lunch would be disclosed on the day of the event, so those details should be dispersed in the next few hours or so the same was the case for investors in london yesterday and in boston tomorrow, and that's also true for investors looking to attend the group lunch in san francisco on friday uber is traveling the country in order to market its $10 billion deal to investors. the executives are expected to field questions related to uber's autonomous driving unit, its path to profitability, its status with regulators, and weather the culture has really changed following a series of scandals and management turnover in recent years. now, media is not allowed inside the meeting, but we will be outside, as always, catching up with investors on their way out to get a feel for the room, some of the questions asked, see what the appetite is like for this deal and so forth, guys. our next guest called lyft's decline and the success of pinterest before those companies
debuted. show you what he said. >> scored a 5.91 and pinterest does a 6.63, versus an average of 6.3 so pinterest is well above average in the scoring system, and we think this deal will reflect that, and it seems to be shaping up to do that. >> explain. >> it was a low score, 5.47 lyft score versus a 5.91 for snap, right? so we were expecting not good things out of lyft. >> so, what does he predict for uber now greg wallace is ceo and founder. good morning what do you predict for uber >> well, i think the first thing that's important to say is uber's not like the other deals. >> okay, because >> this is so much bigger. this is sort of a once in an ipo cycle thing, like alibaba, for example. so it's hard to say it's going to behave like all of the others on the other hand, like, this is why we score them, is you know there were a lot of things to not like about the 500 pages of disclosure, but the score comes out at a 6.35. so it's like straight down the middle not pinterest, not zoom, but not
lyft, either so, actually, there is, as much as there are things you don't like about this thing, the score says it should be fine. >> okay. because you're sitting next to a board member of lyft, explain to us and to her why you feel or why you are more confident in uber's ipo than lyft's. >> maybe i'll keep it grounded on the scores and facts, versus basically our opinions on these things but look, the lyft loss profile was much more significant than uber's, right? so, when you're losing $1 billion of ebitda and $2 billion of revenue, versus losing $3 billion on $11 billion, it's just a different sort of story i think also, lyft opened the market for everybody so as much as people didn't like the way lyft traded -- look, we work with $2 billion of losses as now filed that means the market is open, and lyft did that for everybody. so there's a lot to like about what they did, and they took one for the collective unicorn team. >> for uber, do you take into account the unrealized gains from some of their investments as well when assessing their loss profile because that's one difference that uber has comparedwith lyft. >> sure.
>> because they have all of these investments that they've effectively made paper gains on that they haven't really realized. >> sure. i think that, you know, look, that's one of the things to not like about the complexity of this story, right? there are a lot of things to not like about all of the sort of partially owned interests, including even freight is partially owned if you sort of dig into it. so, no, those things are much less important than does the core business make money at some point? and i think that's what people are looking for. also, investors that are part of the road show will want to know, can we unscramble the eggs of rides and eats, please, because it's going to make it a lot easier -- >> there's been a lot of comparison made between uber and amazon -- >> yes. >> and i think that's a comparison that uber's wanted out there -- >> of course. >> right is that an appropriate comparison, given when you look at both of those companies and where they are in the stages of their life when both went public because i would argue they were in different places. >> so, i think that's right. they are in different places but the other thing we'd say, having thought about this for a minute is, yes, the size and the sort of, you know, we're going
to take over the world or bust kind of mentality is there the difference is, amazon didn't have, like world war iii going on with regulators and class action lawyers all over the world. if amazon had had its pricing regulated, had been outright banned in some countries, amazon might not be amazon. so i think uber's profile as far as what they have to do to accomplish profitability is going to be tougher than what lyft was up against. >> and lyft has been clear about our right to play and our ability to win where we play before we go someplace else. we don't put checkers all over the board and hope for the best and get into trouble in a lot of different places and the regulatory environment for ride-sharing is different in every single country. >> totally. >> and totally expensive so, i kind of look at it and say, the mighty can fall, and they fall hard, and there's a lot of risk in those pages. >> sure. >> right >> 48 pages of risks. >> that's exactly right. >> but when you're making these predictions, you're really
predicting how the stock is going to fair after the ipo, but for how long after the ipo >> so, look, i mean, the primary deal when investors buy at $72 and it opens at $87, that is where the score really matters the most, most of the time >> so, this is a short-term bet, effectively? >> well, look, i mean, there are things that will influence how long the period is before things adjust lyft, because it was so high-profile, a lot of people really focused on it, right? some things take longer to adjust than others. >> and the first in the category to go out. >> sure. but i think back to what you were saying as far as knowing what to play the other thing you see in uber's numbers very clearly is that lyft can have a very big influence on uber's profitability when they decide to take share. >> correct. >> right so, what it means is these two, even though uber is so much bigger than lyft, they have to learn to live with each other at some point or else nobody will ever make -- >> wait, have to learn to live with each other, you mean conspiring to set prices >> never admit to that even if you did it but basically you have an
example of what happened with uber and deetie, where they had to come to terms with each other because it wasn't working. there weren't enough billions in the world to fund that war and i think what you see as far as the aggregate profitability of the companies, which is like we're in an unsustainable place, i think you would say, even not including, are drivers employees, do prices get regulated and all of those factors. >> do you think given how the stock of lyft has performed, with apologies -- and we'll see where it goes, and hopefully, it will get better -- but that -- >> i think you should have some coffee. >> -- that uber has taken its price down in the same way that people looked at pinterest and thought maybe they were too conservative, that maybe zoom was too conservative >> oh, on price? look, do you include all the dilutive shares? like, people are saying 80 to 90, but really it's kind of 90 to 100, right? >> right. >> so, you know, is that conservative well, that's positioning and look, none of these things trade on fundamentals. >> i hate when people talk about the lower number, the lower share number, just say not the
fully diluted. you've given those options away. >> absolutely. >> you've given that stock away. it should be -- >> it's 90 to 100. the math is right there for anyone who wants to dive into this thing it's very clear what the pricing is and so, look, is that a super big bump over where they were in the private market no but as we've seen, stocks can go up and stocks can go down. >> and i think you also have to look at the culture -- >> yes. >> and the acceptability of people that use these services and i think that the lyft culture is a very healthy culture. it's very employee-oriented. it's about doing the right things at the right time for the right reasons. >> is it doing the right thing, period that's what i want to know. >> period. >> that's what uber says they do. >> well, i think actions speak louder than words. >> although i think under dara, things have changed. it's not the uber that it used to be. that was a good argument to say the culture was totally different -- >> totally agree that things do change, but at the end of the day, it's what happens in the long run that matters. >> okay. we will be watching to see what happens in the long run. but rett, thank you.
>> thank you. >> appreciate it. when we return, potential fed board nominee stephen moore will be our ecspial guest during the next half hour of "squawk box. a lot more coming today. what if other kinds of plants captured it too? if these industrial plants had technology that captured carbon like trees we could help lower emissions. carbon capture is important technology - and experts agree. that's why we're working on ways to improve it. so plants... can be a little more... like plants. ♪
"squawk box," the biggest trends in m&a with one of the most powerful dealmakers in the business we'll talk to jpmorgan's global chairman of investment banking, jennifer mason that's next. then we'll talk to potential fed board nominee stephen moore about the controversy surrounding some of his past comments and writings that the white house is now reviewing plus, at the top of the hour, we're expecting quarterly results from mcdonald's and general motors "squawk box" will be right back.
welcome back to "squawk box," everyone 2019 has been a year of big deals, from chevron and occidental petroleum vying for anadarko to regional bank giant bb&t merging with suntrust are there more mega deals ahead? joining us now to talk about the big trends in m&a is one of wall street's top deal-makers, jennifer nason, the global chairman of investment banking at jpmorgan. and jennifer, thanks for being here today. >> thank you for having me. >> so, what do you think about the deal environment right now >> so, i think it's pretty good. and the first quarter in particular saw a clear trend towards bigger deals i think we had 12 or 13 mega deals, so bigger than $5 billion. so, we're seeing less number of deals but bigger size. so it's definitely a bigger deal environment across sectors. >> why do you think that is? >> i think the stakes are high
right now. i think companies have a lot of wind at their back stocks are up. and i think it's viewed as a little bit of a moment in time to make the bigger, bolder moves, and the markets are reacting generally pretty favorably to that. >> how much do you worry, though, we're at the end of the cycle and that this is actually when companies shouldn't be making the deals >> so, i always worry that we're at the end of the cycle, and i think we were a little more worried in the fourth quarter of last year, and that has proven sort of not to be the case, and i think we were jumping at shadows a little bit i would say there's, based on sort of the conversations we're having with our clients and in board rooms right now, i think there's a huge incentive to make the big moves that set you up for the future right now complacency is a very dangerous thing, and i'd say that's true of m&a as well. >> you guys have made some great moves at jpmorgan into the tech space. it's been an area of strategic focus for you. talk a little bit about what you guys are doing in tech >> yeah, so, i've never known --
in my 33 years at jpmorgan, i've never known it to be so aggressive in terms of our own portion, in terms of deploying technology in our own business so, i actually think financial services is going through sort of a fundamental shift job descriptions are going to change the way we do our business is going to change. and that's exciting, but it's a race in order to hold on to that comparative advantage. we've got to move quickly and efficiently. and jamie is really driving a lot of that from the top >> when you think about companies doubling down, a lot of acquisitions, a lot of mega mergers going on talk a little bit about that environment, too >> yeah, so, look, i think if you're a ceo or you're, you know, a board member, i think, as i just said, the sort of dare to be great moment that a lot of companies feel they have in positioning themselves for the future also comes with an enormous list of risk factors in any deal in fact, i think the list of risk factors has never been longer than it is right now, from macro, geopolitical, trade
issues, down to the macro issues of integration risk, and particularly in tech, because we have not seen a lot of big tech consolidation ever, so i don't know that there's a lot of management teams with a lot of that experience. but i think we're likely to see those sorts of big tech consolidation deals in the near future, and it's going to test a lot of that capability, quite frankly. >> jennifer, you talk to warren buffett and charlie munger, and they say we haven't seen a premium like this, where you buy so much of a private company that's why they've been taking berkshire's cash and buying portions of other companies, like apple or something else they've got more than $1 billion on the sidelines sitting there waiting to be used and they just think things are too expensive what do you think? >> i look at ibm buying red hat, which just closed, which was a very big premium but we all know that the best assets combined the pleem yum
price, you know, the beach front property theory. so, i think it depends on what you're buying and are you buying the best asset, and is it strategically compelling, in which case price becomes, quite frankly, less of an issue. i think the danger is when you buy option two, three, or four, at a big price, and then you can be in dangerous territory. >> when you say that you're always worried about trying to figure out when the end of the cycle is coming, what are warning signs that you might see along the way that might tell you that it is >> there's a lot of things just general sort of macro data around growth and where we are you know, at jpmorgan, we sit on top of an enormous amount of information that we can process, from consumer data through enterprise information so, there's a lot we have to look at all the time but consumers still feel pretty confident right now. consumer balance sheets are in very good shape. i'm a little surprised, actually, that corporate performance globally is still as strong as it was i would not have thought that was going to be the case, if
you'd asked me in november of last year. so, we're constantly sort of retooling and refining based on all this data right now. but stocks are up. confidence is very high. and i think with the technology shifts that we're experiencing right now, you can't afford to be slow or complacent, or we'll have another trillion-dollar competitor that you're dealing with, certainly in the tech space. >> ipo markets still strong? >> ipo market is -- i actually think we're going to view 2019 as sort of a game-changing year. you're going to remember who went public in 2019. >> and you did the lyft -- you led the lyft ipo. >> i didn't do it -- >> but the firm -- >> -- solely on my own. >> is success -- you look at the lyft ipo, pinterest, zoom. some people, by the way, would look at zoom, even though it zoomed up, and say that's not a success. >> right. >> how do you assess it? >> i think success is in the eyes of the company, as opposed to everybody else. and look, lyft went public
it's got a $17, $18 billion market cap it's got a tremendous future in front of it. i mean, the market opportunity for lyft and uber as well is enormous and you know, ask me in three months, ask me in six months, ask me in a year the same question >> if it's still below the ipo price, you would say it wasn't a success at that point. >> well, yeah. do i wish it was trading above the ipo price, sure. it's going to get back there. >> it is for the company and shareholders need to be patient and you need to let things play out. >> yeah, facebook did the same thing when they went public. >> exactly. >> so i think you can't really -- >> -- get back there, you're like -- >> never's a long time. >> jennifer, thanks so much for coming on. >> thank you for having me. >> thanks, jennifer. okay, coming up, the white house says it's reviewing some past writings of potential fed board nominee stephen moore, who we've known for years, just not in this way, this context. we're going to talk to the author of "trumponomic" about
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and you've been on the show over the years, many, many times -- >> thank you for having me back. >> great to have you today on the set. i don't -- did you ever think that a fed board position was in your future, stephen. >> no, i never really did. i mean, it was the honor of my life when the president called me about a month ago and asked me to do this. and i have kiddingly said, you know, mr. president, you're throwing me into the frying pan. i had no idea that it was going to be like this. and by the way, let me just -- >> uh huh. >> i talked to a reporter the other day who has covered the fed for 30 years he said he's never seen anything like this before i mean, it's not like i'm going to be chairman of the fed. and so, it's been kind of a lightning rod. but i'll say this, joe -- you know, i was reflecting on this last night and talking to one of your producers -- if there's anything positive coming out of this, all of a sudden everybody's paying attention to the fed and what its role is and what people think about the role of money, and i think that's a positive thing, if anything good
has come out of this. >> and i hear exactly what you're saying, but approach it this way -- >> yeah. >> i'm not sure whether the president looked into all of your writings at heritage -- >> i'm sure he hasn't. >> -- about your view on monetary policy. so, i'm thinking that he saw you basically say, agree with him about the fed should not have been raising rates, and i think you called it economic malpractice, that rate hike in december -- i think he saw that, and most of the decision he's making is based on you sort of being a political ally in terms of what you're going to do on the fed. and i think that might -- i don't know -- i mean, i know a lot more about -- maybe -- about your thinking. and i think, i'm not saying you wouldn't be a good fed board member at all, but i'm not sure the president made that decision based on a deep knowledge of what your feelings are about monetary policy. >> actually, i'll disagree with that i've known the president for now for four years and larry kudlow started working -- i think it
was almost four years ago. >> larry could have been -- >> my point is, i was working side by side with larry kudlow and art laffer and donald trump to put this economic agenda together look, the biggest selling point for me is i helped put the economic agenda together we've got the best economy in 20 years, the best job market in 50 years. i mean, that's a pretty good qualification. all of these people, by the way, who are attacking me, people on the "washington post" editorial board, "the new york times" editorial board, paul krugman? i mean, can you think, joe, of three entities that have been more wrong on the economy over the last three or four years than "the new york times" editorial board? >> no, i can't. >> these are the people, literally who said if donald trump is elected president, he's going to cause the second great depression now we have the best economy in 20 years, and these are the people who are attacking me. so, my only point is trump has known me for a long time trump was trying to think, what could i do to help serve his economic agenda, and i think that's why he tapped me -- >> not necessarily what the
fed's mandate is the fed's mandate is price stability and full employment. it's not necessarily, as we know from past arguments presidents have had with the fed -- it's not about the president's economic initiatives to spur growth and get him re-elected. that's not why the fed exists. >> no, but look, i think the reason the economics team over there picked me, because it wasn't just donald trump a lot of people had some input into this. it was because we believe -- i mean, this is the core belief of sort of supply side economics -- >> right. >> right. >> -- that you can grow this economy at 4% without inflation, with full employment, and incidentally, i mean, the news that we saw on friday is further vindication that trump's agenda is working we have 3.2% growth and there is no inflation out there. >> stephen, let me ask you, though, about that, because i think there's two significant economic questions that relate to this. >> yes. >> and we can criticize different newspapers for predicting one thing or the other, but then at the same time, then we have to look at the predictions that you've made over time. >> right, sure. >> you know, after the financial
crisis in 2010, you were calling for hyperinflation you thought that things were going to get -- >> yeah. >> and that clearly never happened more recently, you've been talking about the idea that we are living in some kind of deflationary time, which i also don't think is necessarily accurate >> right. >> so, how do you square those issues >> so, good question first of all, let's go back to the great recession. go back and read my book read the first two chaptersof the book that laffer and i wrote in 2008, that came out in the summer of 2008, called "the end of prosperity," where we called -- we basically said, this is the end of prosperity. we're going to see a period now of, you know, severe economic contraction, and we were exactly right. i mean, i feel like if you look at economists, who had that period right i did. i was the one who said the economics $800 billion stimulus plan would not work. i was the one who said all of obama's regulations were going to create a very, very poor recovery, and -- >> you would have wanted more expansionary plan, in fact, i
think if we go back in time. >> i was wrong -- and i've said this from day one -- i was wrong about what happened in terms of prices in 2009 and '10, '11, but what i wasn't wrong on was that all of the, quote, fiscal stimulus, has almost zero impact on growth. and my point was -- and this is an important point in terms of understanding monetary policy, because this is a teachable moment for people -- you can't make up for bad tax policy, bad regulation policy, you know, bad health care policy, by printing money. and that was kind of the view of the fed, and it doesn't work and that period proves it. now, in terms of the last few months, again, has there been any economist who's been more right about the last four months than me? i was the one -- you're right, joe -- i basically did say, this was an act of economic malpractice. and guess what, it was an act of economic malpractice when the fed raised rates in december, it was indefensible, the stock market crashed in anticipation and when that happened and by the way, when the fed put
its tail between its legs -- i mean, let's be very clear about the chronology here. it was really starting that day that the stock market and the economy boomed and we've not got -- >> so, thank goodness the fed listened to me. >> but how can you say we're in a deflationary period? >> look at what happened to commodity prices over that period from september through december they fell like 13.2%. >> just to be specific, then when your call for deflation was strictly about commodity prices? >> yes every element, soybeans, wheat, cotton, copper, oil, natural gas, all of them were falling in price. now, tell me how that's not a deflation when you have every -- my point about commodities -- because again, this is a teachable moment for people understanding how prices work. the best forward-looking indicator we have on where prices are going is to look at commodity prices, because those -- you have it right on your computer screen what's happening with -- in realtime. we don't know what's happening with the consumer price index. we don't know what gdp is. we don't know, what the producer
price is for three or four months afterwards. so i like to look at commodities. i'm not going to only look at commodity prices, but i do think they're a good lead -- they're the canary in the coal mine about where prices are headed. >> so, stephen, when you think about the future, all right? let's say you get into the fed. >> yes. >> what do you see in terms of the value added that you can deliver collectively >> that's a great question and i really liked the piece that jeremy siegel wrote about me yesterday in the "wall street journal," where he basically said, look, i don't even agree -- he said i don't agree with stephen moore on a lot of things -- he agrees with some of the things -- but he said it would be healthy to have divergent views on the fed, and i happen to agree with that. and the question i would ask my critics is why are they so afraid of me why are they so afraid that someone with my views will get on the fed and i think it's partly because they think i'll be an effective communicator and maybe change -- i'd like to -- i said this a couple months ago on your show -- i mean, a couple weeks ago on your show i'll say it again. i want to make chairman powell the most successful fed chairman
in history, where we do get 4% growth with zero inflation i really think we can get there. >> do you think it's ridiculous for people to worry about the comments in the past about women? that might be what they're fearing. >> i mean, look, if this comes down to, when we have that vote, and you know, in the senate, because i have to get 50 senators -- if it comes down to things i wrote 18 years ago that were in politic that i've apologized for that, you know, insulting, then i'm in trouble if it comes down to my economic ideas -- >> this is not just stuff written 18, 20 years ago i knew you for a long time and i was surprised by in of the more recent things. 2014, column for "the national review," what are the implications for a society where women earn more than men we don't know, but if men aren't the bread-winners, will women regard them as economically expendable we saw what happened to family structure and low-income and black households when the welfare check took the place of a father's paycheck. divorce rates go up when men lose their jobs. >> i'm glad you brought that up, because let me clarify what i
was trying to say, because maybe i wasn't being specific about this the biggest problem i see in the economy over the last 25 years is what has happened to male earnings, for black males and white males as well. they've been declining, and that is, i think, a big problem look, i want everybody's wages to rise, of course but talking about women's earnings, they have risen. the problem has actually been the steady decline in male earnings, and i think we should pay atepsion tention to that, bi think that has very negative consequences for economy and society. >> yeah, but i also think, as a bread-winner in my family, i think that women should be paid fairly for what they do. >> i agree no disagreement on that. >> you just need to have a semicolon and make sure you're always saying that as well. >> amen. well put and that was the point i was -- if you read the whole article. this is the problem. people take one one or two sentences out of a piece it was all about what's happening with white middle-class and black middle-class earnings, and they've been falling for males,
whereas women's earnings have been -- and i want gender equity in terms of pay and things like that, but i want to make sure everyone's wages are rising. by the way, our record on wages has been fantastic i mean, we've seen really big gains -- >> so you're in the middle of process, steve do you end up on the fed or not? what do you think? 50/50, 80/20, 10/90, what do you think? >> i think i'm going to be on the fed. by the way, the president and the white house economics team's totally behind me on this. i mean, i've actually been -- >> which has been apparent, too. >> they came out again yesterday -- >> they -- in fact, one time a couple weeks ago -- >> you'll still come on if you become a big-shot? >> say you're not stepping down, get back in the race >> you're still going to be on the show if you're a big-shot? >> i'm not going to remember the little people like you. >> i know. that's what i'm worried about. >> i'm teasing. >> thank you, steve. thanks for coming on maggie -- >> good luck. >> thank you for spending two hours with us. >> it's been great i enjoy you guys terrific when we return, starwood capital group chairman and ceo
record the global investor joins us live for the hour. he'll weigh in on everything from the fed to consumer companies to tech and real estate the final hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin the futures have improved now. we've got some dow components that have reported so, i'm talking about the dow futures, because you can see that alphabet is certainly affecting what's happening in the nasdaq but with merck, pfizer, and most recently mcdonald's all with some pretty good numbers, the dow has now managed to trade up 82 points in the premarket the s&p's flat, and the nasdaq
indicated down about 43 points or so. do we -- >> i'm looking at the mcdonald's number the diluted number is $1.72 a share. the street was looking for $1.75. so, i was just trying to see if there was anything in it, because the sales were better than expected mrks $4.96 billion versus the $4.92 -- up way better than expected global comps up 4% versus the gain of 3.4% that the street was expecting. systemwide sales were up 60% in constant currencies. oh, diluted earnings -- yeah, so, i'm still looking through to see if there's something in that headline number that isn't there. steve easterbrook making some comments, saying two years into their velocity growth plane, their sustained performance gives them confidence that the strategy is working as more customers are experiencing a better mcdonald's every day. again, most of these numbers look much better than had been anticipated. >> yeah, it's weird. the 172 --
>> i don't see anything in the 172, but -- >> results in 2019 included 6 cents a share of additional tax cost due to regulations issued in 2019. could be it. >> maybe that was it, yeah. >> that put it -- that would put it at $1.78? $1.72? >> plus 6. $1.78 versus $1.75 potential again, that stock is up sharply, a gain of almost 2.6% at this point. the third dow component to report better-than-expected earnings. >> it would be a weird-looking miss, if it's a miss. >> i have a hard time believing it's a miss, buts i don't know exactly what analysts were expecting. >> probably 6% from the tax law. >> well, let's call it that. again, u.s. comps were up 4.5%, global comps up 5.4%, and i know that's much better than the 3.4% the street was expecting we're going to hear more from a top analyst later this hour. >> that's why the dow all of a sudden is up 100, though seven times six is 42 points just on mcdonald's is that an all-time high
i think that's -- yeah, that is an all-time high and i've been doing this so long, i just remember when it was 12 and they were having trouble. barry sternlicht's here. remember when they lost a couple ceos tragically? >> yeah. >> and they lost their way a couple times it was a $12 stock >> i got a call by a hedge fund to join the board, you know, and they were going to go after them. >> way back then >> yeah, four or five years ago, yeah all right, general motors also out with first-quarter results, earnings of $1.41 a share, beat estimates of $1.11 revenue $34.8 billion, was just a little bit shy of expectations that stock for its count is down 1%. >> mary barra making comments as well saying confidence in the year ahead remains strong. gm and mcdonald's, obviously, two of the biggest consumer-facing companies out there that are going to be reporting. again, we'll take a look at what else is happening with these stocks, but again, these are two of the biggest consumer-facing
issues that we've been watching through the earnings season coming out barry sternlicht is our guest host today he's the chairman and ceo of starwood capital group, and barry, you've got a great idea of what's happening with consumers through all of your businesses that you're touching. what do you think so far what do you think about consumers? what do you think about the economy overall? >> it's a simple morning question the consumer's pretty healthy, as you know. the mcdonald's numbers -- the comp sales is probably what's driving that stock that's pretty good and to be higher internationally than domestically is pretty strong and those are good numbers 5% same-store sales growth at a company as old as that now they have to come up with their own impossible burger since burger king announced that yesterday. but in general, the consumer i think is -- you know, there is a lot of consumer debt and he's spending in, you know, in a reasonably disciplined manner and it's interesting, though,
how consumer tastes are shifting and what they're spending on so, in retail, of course, which we have some exposure to and footprint, you know, there are hot brands and not hot brands. the ones that derive from the internet, whether it's warby parker, they're all birds, sweet greens -- not really an internet company, but it is a unicorn these brands are doing really well warby parker is posting sales in stores that look like tiffany. and the brands of consumer companies born in retail or never repolished their images are kind of lost today that would be the gaps and some of the older apparel companies so, there is spending. and then, of course, for the young teen who used to be the heart of american retail, i mean, they are spending their money on apps, whether it may be e-gaming or their subscriptions to spotify that is literally the money they used to spend on jeans. so it's shift 'but the consumer
feels i think reasonably confident, but he is spending a lot of money consumer credit's really high. >> you made an interesting point in the notes, where real estate is so closely tied to technology like, you've never seen it before that is an incredibly important component of why real estate prices are hanging on where they are. and we're talking about commercial real estate why is that? >> well, the tech sector, as you know, it dominates the u.s. stock market and it's helped the dow rise to where it is, the nasdaq to rise where it is it's much more dominant in the u.s. markets than in the euro stacks index it's like five times the size. they don't have the scale of the companies. those companies are powering off this absorption and you saw we were filing yesterday, or refiring, whatever that was, right? i mean, that company has shifted to enterprise, so that is also tech like, they're doing space for amazon, for facebook -- >> you're not saying they're a tech company, though. >> well, but they're reliant on the tech sector. >> okay. >> so, 35% of all leasing in the
united states now is coming from tech companies -- >> 35% >> 35%. >> where is that from what it was a decade ago >> five times. and so, most of the incremental growth is coming from the tech companies, and that's powering the office absorption, which is pretty good. the markets are pretty good in the united states. but you can name the faang stocks, and they're all taking space, whether it's google downtown with their new purchase here in new york or google's million-square-foot project in london. >> or amazon in other places, not new york, but -- >> and amazon. we'vedone a couple investment deals with amazon. we actually spoke to them yesterday about something. so, they are the movers and they are driving. so, all these markets are now correlated around the faang stocks, all of them. >> that's kind of a scary thought. if the tech stocks go down like we've seen them go down in the past, that's going to take a whole lot more with it than we've ever seen before. >> and the newest thing is regulation, right? you have to think about the outlook for some of these companies and the general sentiment and whatever happens next year in the election. will they get -- you know, the politicians, whether you're
bernie sanders or you're donald trump, they have a nation state to deal with in facebook nobody -- even donald doesn't talk to 2.3 billion people his twitter account is not 2.3 billion people so, these companies -- they can set an agenda, and it scares them especially when you get to europe where they're really not letting these companies take apart their fabric in their society. so, if you think about politics intervening in the future growth of these companies, then they don't have the -- there's not the risk premium in the market there probably might, because definitely the conversation is different today -- >> we had the stocks on the screen before. are you owning these stocks? >> i own google. >> what'd you think of their earnings last night? >> they weren't spectacular. but you know, i think they're a great -- actually, i'm one of the cheapest of the faang stocks they don't trade at a huge multiple they can generate any cash, they can cut their costs. >> is there a problem there?
we were talking about, did the analysts miss it what do you think's happening? it literally -- we looked, 7%'s been shaved off the stock overnight. >> google's like the general motors of tech i mean, it kind of like never gets respect since its multiple. it trades at like 11, 12 times ebitda i mean, that's amazing for a free cash flow generating monster like that. and you know, they have these -- i spent an evening with the head of moonshots, astra geller, and he tells you about these wacko projects which are really cool and only a company with the free cash flow of google could take all these risk and start businesses and so, they can produce almost any earnings they want, in my opinion. they could stop any of those projects, they would have greater margins -- >> it wasn't the earnings that was the problem as much as the ad sales was that the concerning point? >> yeah. >> was it for you? >> there was some hardware the cloud came in a little bit light. >> i mean, cloud is definitely getting more competitive, but it's growing everywhere. you saw microsoft's numbers were terrific --
>> and amazon's on amazon web services. >> everybody wants to play in the cloud, so that little monopoly is probably not going to hold forever. >> you mentioned we works before what's your view because i feel like you've gone back and forth on we works >> it's -- why don't we save that for the next -- >> give us just a tease. we'll get into it later. >> it's a real business. there's a real business in shared office space. in a way, it's genius. you're cutting apart the office lease like loom near did the mortgage market. you can take space for just the time you want it and it hasn't been tested in downturn that's obvious and so you have this mismatch, although it's, as he signs long-term enterprise deals, meaning leases to companies that are five years in length instead of five days, that takes some of that risk out. the numbers where they operate in the major markets -- london, new york -- really good, really good, where they dominate the market, but they are the number one player in real estate today.
>> it's a loss overall, so it's just the expansioninto the other markets that's -- >> he's growing so fast, he's losing a lot of money, straight-line or nonstraight-line accounting. and so, i think his access to capital -- i mean, when you've got five-odd billion in cash lying around and you're losing $2 billion and softbank's already given you $10.5 billion, i think you'd better find another way to finance yourself if you're growing at that pace he's playing to be a $300 billion company. and i know him very well i'm very impressed with his leadership, and he's built an amazing company. we just financed their headquarters, their new headquarters here in new york city but it's very competitive, very fragmented, and there's a lot of people nipping at the heels, too. there's a lot of good, small companies. they've got a grand, too we work is do you want your employees in a we work or do you want them to be more serious so -- >> maybe because of the beer and the ping pong and stuff -- >> yeah, not every company wants that and i think you'll see little baby we works, a lot of them
>> that's a good question, though if there are baby we works that they're competing against and you're losing money, so you need to find a way to step things up, and you're doing that in a great economy, what happens if there's a turn before you get there? >> the pace of growth is really -- you've got to hold on. this is a rocket ship. i mean, they are expanding into markets. some of their margins are not great, kind of like uber, when they moved today a new market. sometimes it's working in brazil and not working in other places. china's not a market that really needs to be this intermediated because the lease term's only three years. so you're not a start-up signing up for 40 years like you are in london that's why london was so easy for them the lease term was 25 years. so if you're a small start-up, i want to get a space for six months, i want it for 100 people i don't know if i'm going to have 300 people in a year. it's a very good product for that market. when you get to markets that have short lease term, you don't really need a we work. so, i think they're growing in so many ways they're a pretty exciting company. and i wouldn't bet against them. >> what do you think about airbnb versus the rest of the hotel companies? marriott yesterday announcing
that it's going to spin out this -- or it's going to ramp up this part of the company where they've been kind of testing out a competitor to airbnb you have these apartment leases that you give out to people and do it on a hotel basis you give them loyalty points >> marriott's like a giant reservation system, so they think of themselves -- and they have a brand the consumer trusts globally i think airbnb, all the start-ups make people slightly nervous and you don't really know the product you're getting, so it makes sense. we invested in a product with marriott in europe -- >> the pilot project for this. >> yes and so, i think they like it it's like fees to them and fees are good. so, again, i think what airbnb represents to hotel owners and to consumers is a relatively cheap distribution system. they charge you 3% now, expedia, to book a hotel
room, will charge you 15% to 20%. >> wow. >> so, you would give -- if you could, you'd give all your hotel rooms to airbnb. >> right. >> at a fifth of the cost. >> right. >> so, i think marriott just wants to own the travel experience, whether it's an apartment or a hotel room. it's kind of offensive and defensive. it's going to be high margin, and if there is a huge shift to this, you know, these apartments -- airbnb has run into a maelstrom in the united states the unions -- i'm on the hotel lodging association, and we get emails from the lobbying group every day about taking down this market and that market serially, they're going after airbnb because consumers renting apartment doesn't pay hotel occupancy taxes, doesn't help the unions -- >> cities. >> yeah, the cities. so i actually was right in the sense that airbnb's penetration in the united states has slowed in the major markets and i would say -- i just late last night stayed at our hotel in central park.
we're sold out i couldn't get my brother a room tonight. >> you couldn't get your brother a room >> month to date, we're at 96.5%, so i can't see airbnb's penetration or impact on my hotel here. >> you couldn't get your brother -- >> is this your cheap brother? >> i had to get him -- >> this is your black sheep brother, the one you don't admit is your brother, right >> i have two great brothers. >> you couldn't get him -- barry sternlicht couldn't get him -- >> i'm going get him an airbnb. >> could you have gotten the other brother a room >> yeah, i don't know what he's doing -- >> could you have gotten me or andrew a room? >> you, joe, always. and andrew slips in the back door but look, i think it's really interesting because in europe, they would be crushing it. it's a bed and breakfast culture and -- >> if i get a room, i'll bring an air mattress. >> it's a profitable company it's not like a loss company -- >> like some of the others -- >> barry, did jeremy, did you put a jacuzzi in yet >> at the jeremy >> at the jeremy that's what you need
i told you that when i was out there. nice pool -- >> i flew overnight from the jeremy i was actually up -- >> how is it, good >> it's coming along the one in los angeles, it will be good. >> barry sternlicht is our guest. he's with us for the rest of the hour and it's great to have you here. >> jacuzzi four seasons. >> i'll get you one. >> okay. coming up when we return, it's a big day for corporate earnings with three dow components already out we're going to get you checked in on the morning's biggest premarket movers and what you need to know ahead of the opening bell, when "squawk box" returns right after this uh-oh, looks like someone's still nervous about buying a new house. is it that obvious? yes it is. you know, maybe you'd worry less if you got geico to help with your homeowners insurance. i didn't know geico could helps with homeowners insurance. yep, they've been doing it for years. what are you doing? big steve?
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welcome back to "squawk box. when we look at futures, we've had a number of dow companies reporting and the dow is up 73, 74 points, nasdaq off about 54 points the s&p 500 off about two points and joseph -- >> yep, just an hour to go now before the -- a little bit over -- before the opening bell. dominic chu joins us again with a look at some of this morning's biggest stock movers i don't know mcdonald's' latest slogan they've had so many great ones but wow, you deserve a break today, dom look at it.
>> i'm lovin' it i don't know what the bulls are saying right know. >> you're loving the move. >> breakfast all day i mean, maybe i'll get a cup of mcdonald's coffee. i'm not sure whatever they're doing, mcdonald's is doing pretty well. but let's look at other numbers. mastercard just coming out with numbers, better than expected. some earnings and profits there as well, about 1% gains. we'll see if mastercard can kind of give a little bit of a boost to what's happening with the overall situation with the markets. they were helped along by better online transaction volumes this time around. so that's something to watch also, check out shares right now of another one we're watching, general motors it came out with better-than-expected profits, handily beating estimates, but revenues came in slightly below estimates. they were, though, helped along by better full-sale prices of pickup trucks. i should also point out, guys, that at this point, trucks, suvs, and crossovers make up 80% of the gm sales mix, so you can see where their bet is at. and then we'll finish off with another big look at shares of general electric gaining some steam, right near their
premarket highs. a huge amount of volume trading right now, already over about 10 million shares at this stage after that profit and sales kind of coming in with expectations there, better than expected. it was helped along by some of the better results on health care and aviation. we should also point out, becky, that they did point out a new risk to their upcoming earnings, and that is because of the boeing 737 max jet groundings. they do make engines for them, and they do own a number of those aircraft and their aircraft leasing business, so that's the update on ge, and that's a look for right now. we'll see what happens with the rest of the earnings season this morning. becky, back over to you. >> i heard mastercard. visa, the dow component. >> yes. >> will be -- >> reporting. >> that was my contribution there, is that -- >> we have a running list of dow components -- >> dow components that we forget are dow components so when they come, we need to remind ourselves visa. >> i want to know, because becky is kind of doling out the assignments for these earnings -- >> i am? >> yeah, you told joe -- >> oh, joe and i did a toss-up,
who gets pfizer, who gets merck. we took -- >> he told me to take pfizer -- >> you said who do you want me to do? >> and you said pfizer, you know all about it. >> you know what i'm saying? i do not take lipitor. >> yes, i know. >> and you told all of us that you didn't it was for the record. >> no, i don't take lipitor! i'm happy i don't. >> i'm not saying it's a good or a bad thing. i just know now for the record that you were saying you were not taking lipitor. >> $60 a pill, i just can't -- [ laughter ] >> oh, barry's laughing. >> hey, dom, thank you we'll see you soon. >> you got it, guys. >> what, do you get them for $1 online >> i don't know, from canada. >> wise idea not. when we come back, much more with our guest host, barry sternlicht we're talking real estate, including a west coast milestone we haven't seen in years that is next edevyby., erod you're watching "squawk box" on cnbc let's build a better world for investing. let's always put investors' needs above our own. as investment management professionals, let's measure up.
welcome back to "squawk box" this morning the futures right now, dow in the green. some decent numbers, or better than decent numbers out of mcdonald's the dow up about 76 points, 77 points nasdaq off about 53 points s&p 500 off a little over a point. becky. san francisco home prices falling for the first time in seven years. the median home price in the bay area actually dipped by 0.1% from the prior year to $830,000. that makes a streak of 83
straight months of increases, breaking that streak barry, i guess the surprise is just breaking the streak, but i guess it had to be broken at some point >> streaks are made to be broken you know, the bay area's a little tippy >> hmm. >> it's a little tippy we won't -- we haven't talked about where we are in the cycle, but this spring of ipos, it feels late cycle to me. >> yeah? >> and, very late cycle. and then people thinking that if they don't go out now this year that we have a slowdown next year, which is kind of base case they're going to have to wait a couple years and if you're a deficit, losing money like an uber or lyft, you'll have to raise money and you don't want to raise money when you have to raise money. >> have you taken money out of the market as a result >> i have gone -- i am leaning into raising cash in this market, yeah. >> you are >> yeah. it feels melting up -- it feels like you have to get in, in my
past life. and i'm old enough now to have made this mistake. when it feels like you should get in, there's reason to think you should take chips off the table. >> when did you start feeling that way, very recently? >> my base case is a slowdown in the economy next year. because i do think the election's going to drive businesspeople wacko i mean, we're going to be watching the left and the right. and you know, the debate really frustrates me, because as of april 1st, gallup says 27% of americans are democrats and 26% are republicans. 44% are independents and all you hear about are these two nutjobs on both sides. and the nation's like a ping pong ball. and ceos are kind of that way. they may be fiscally conservative, socially liberal today, and they don't have a party. so, i think we're going to watch this and go, like -- we'll just wait to spend money. we'll just wait. and we'll have a slowdown, because that and the expiration of the $300 billion stimulus packa package, which was spent last year and this year -- you're going to have a slowdown just
because people are watching their tvs. >> barry's our guest host. we'll get more from him in just a little bit. coming up, grading the trump tariffs and the tax cuts we're going to get a clearer picture on attitudes towards the president's signature piece of economic legislation, but also a better read on policies that many businesses oppose some new cnbc data on this topic is next. as we head to break, take a look at the shares of ge. not a dow component up big after quarterly top and bottom line mnis earlier thisorng stay tuned you're watching "squawk box" on cnbc weeds are lowdown little scoundrels. don't stoop to their level. draw the line with the roundup sure shot wand. it extends with a protective shield and targets weeds more precisely. it lets you kill what's bad right down to the root while guarding the good. roundup sure shot wand. got weeds in your grass too? try roundup for lawns. kills weeds, not the lawn. roundup brand.
all right, welcome back to "squawk box," everybody. the federal reserve kicking off a two-day meeting today, and we're kicking off cnbc's latest fed survey here with some key data on attitudes towards president trump's efforts to stimulate the economy. steve liesman joins us with more steve, good morning. >> good morning, becky yeah, three key pillars to the president's economic policies -- tax cuts, deregulation, and the tariffs. we asked about all three how about those tax cuts
21% say they've already increased capital spending and growth 35% say they will increase it. so, there's more to come here as far as this group is concerned, the 40 respondents, strategists, economists and fund managers more to come from the tax cuts but 35% are skeptical. they say we'll never increase capital spending and growth. how about long-run potential this is the important thing. this hangs around forever. it's seen to be 2.3% and 35 basis points -- folks, that's a lot. i know the administration wants 3 and 4%, but if you told me you could raise potential by a third of a percentage point and that would go on for a long time, pretty good results. i will say for half of this year -- cut this in half -- is gone from the tariffs. how about deregulation 82% say they're positive for the economy and economic growth. only 9% say no effect, and 5% say negative so, overwhelming support for the administration's deregulatory
efforts. barry knapp says "it seems highly likely the 2018 recovery in productivity was no fluke and there will be continued strength in 2019. it seems there was a positive supply side shock. and the impact on productivity is where this will matter, especially for the markets and for the federal reserve. quick check on what our panel is saying about the outlook for the fed. 100% total agreement -- no rate hike in april/may, the april/may meeting. 2.48%, that's the outlook for the funds rate this year and a $3.5 trillion balance sheet. andrew, i don't know if your guest has seen any impact from deregulation, but we wonder if that's helped out his industry as well. >> okay. thank you for that, steve. we will ask him that very question when we get back to our guest host right this minute barry sternlicht is here from starwood capital group you heard what he had to say what's the answer? has it impacted your business? >> um, climate it's just the climate's better for business, right? so, when we talk about, since
trump was elected, and we are not the villain, and the business feels better, but you know, i guess, when you're running trillion-dollar deficits with 3.8% unemployment, things better be good we're throwing kerosene on a fire, right? we're -- it doesn't feel like a healthy economy because you know we'll slow down at some point and you know the deficits will rise, and you know the chinese won't be buying our debt the way they used to, so that rates should rise. i mean, the biggest surprise of the year, and certainly from my industry and for read investors and for any yield, has been the movement of rates. rates have shocked people. and i was looking, 100% of people think rates won't move. >> right. >> it's -- that worries me a little bit i don't think the fed's raising rates. i actually think they'll lower rates at the end of the year because of the slowdown you'll see coming. >> and you think the slowdown is a function of an earnings slowdown or do you think it's a
function of an elections slowdown coming. >> i think freebusinesses are gg to freeze or lower capital spending before the election the right and left are so far apart on treatment of taxes, roll back the taxes, taxes on businesses, taxes on everything. i mean, and that discourse is really impacting my psychology, how i invest my capital, and for other businesses and the expiration of the stimulus package and that $300 billion, we don't talk about it, but it was a lot of money. the obama stimulus was $800 billion on 10% unemployment. this was $800 billion on 4.1% unemployment at the time or something like that. so, i think, you know, with europe and the situation in europe and china's uncertainty, the world is generally slowing it's just slowing a little bit and you know, europe is facing -- i was talking to somebody this weekend. i was out on the west coast, talking about what's going on in europe with italy and with france's elections, and they're really worried about france, and
you know, the yellow jackets we don't talk about but generally, things in europe are not great. so, i just think we'll slow down i think deregulation's important, but you know, we have this debate now about capitalism is it the right system and do you ever remember, joe, this discussion about capitalism, in the last 20 years? >> i do think that people are talking about tax policy i don't think they're talking about capitalism i just think they're talking about ways of, you know, of making sure that we try to equalize opportunity to the maximum extent possible, and if that takes some redistribution from the top -- i wish they'd come up with some ways i knew it'd work. we'd be fine but with you, if we did raise rates significantly on people, you might want to use some of that for deficit reduction so all we want to do is just -- >> the wealthy would pay more taxes if they felt the government would use the money effectively, and you can't find many cases of the government
doing a thing. does anybody admire any part of the federal government today and the way they spend money, anything you like? >> just the armed forces and guys and gals -- >> i don't think anybody will tell you they're the most efficient. we admire their service, but, allocation of capital isn't evident. >> to me, barry, i think some of the tax plans that we're hearing from the warrens and the sanders, et cetera, i think they're just bonkers, but we've got a wild card in president trump in that you never know if the 40% that will never vote for him -- if that grows to 47%, for whatever reason -- a nasty tweet or whatever it is -- someone like bernie sanders -- it's not out of the realm of possibility -- he could get elected. or someone -- i mean, who are they going to run? i don't know about biden i watched him yesterday -- >> the middle's open. >> well, i think howard schultz is the best candidate, or mayor peet, maybe, even though he's very liberal, too. but some of the candidates i don't think have serious candidates beto i don't think is a serious candidate. kirsten gillibrand i do not think is a serious -- a lot are
not serious candidates. >> i agree. >> but the serious ones -- howard schultz, why didn't he run as a democrat? >> how about buttigieg with biden? that would be a tough ticket for trump. >> that might be, although -- >> very tough ticket. >> i don't know, joe -- >> young and old and fresh face and obviously future -- >> and if that would be the candidate, that would do what to business >> if biden goes to the middle, it'd be okay if he starts like his little talk in pittsburgh last night, that's a little scary. i mean, that's scary i'm not antiunion. we're friends with the union in cities like new york we operate union hotels. but there is a point where unions become racketeering, where they're -- this is not about protecting workers like, we pay bar backs in new york city $32 an hour -- >> what's a bar back >> the guy who takes the glass and puts it in the dishwasher. you know, that's not a high school job that should not -- we should have a system where people are encouraged to actually get more skills and get a better, more education, and they just -- there isn't a restaurant in a
hotel in new york city that can make money it's impossible with the union wages. that's not smart they're not creating jobs. they're not -- i mean, when we owned the st. regis years ago, we told the union we'd close the restaurant because it was a recession. they thought the -- remember the five-star hotel? they thought it was the french -- and remember the french fries it was a bad time, after 9/11 -- >> freedom fries. >> and they were boycotting and we were losing like $50 a head, people eating dinner at the hotel. so we told the union we either need to restructure it or shut the thing and they said go ahead and shut it. they didn't care about the jobs. so, i think -- i think the country needs middle-waged growth we desperately need it, and we need to figure out how to make that happen. that's the start of the cycle, interest rates and the fact that wages haven't gone up. they're going up, but not as fast as i think we would have thought they'd go up at this point in the cycle with all the bottlenecks in the economy, which is another reason why the economy's going to slow. i mean, you talk to
homebuilders -- and we started one, tried point on the new york stock exchange and i was just with shea's on the west coast. there are serious labor issues and costs are so high. they can build houses, nobody can buy. >> how come we don't see that showing up in the broad numbers, the broad statistics we look at? inflation's not a factor right now. how come we don't see that >> commodities are offsetting some wages, and i don't know i mean, i know what's happening to us. i know how it's harder, we pay more and more for less skilled workers, and i don't have an issue with that, except, the country needs to move its skill set up and then you'll pay people more, because not -- like, the bar backs shouldn't make 32 bucks an hour plus full health care benefits that's like $60 an hour to us, and we can't make any money. so that's not good for anybody that's not good. that's not smart. >> what's that lead to, automation >> not jobs. >> you've got one of the serious candidates on the left wants to
take the proceeds from the big box office opening and just give it right to disney employees >> bernie. >> that's the kind of rhetoric you're hearing right now >> the left doesn't understand that companies need to make money in order to invest in new projects and new businesses. >> no, they don't understand that. >> france has the other -- >> they might get elected. >> you make money, it goes to the workers. so france is sort of stuck and it doesn't grow and it just drafts behind germany. >> preaching to the choir. i don't know. >> it doesn't work but i have three kids. my youngest kid is like -- you know, i've listened to him because he -- and my oldest son, too -- but they talk a lot about the left >> i told you not to send him to brown, didn't i? >> my daughter went to brown. >> where'd the sons go >> we're going to do a whole segment on this tomorrow morning, but institutional investor has its rich list out today, going through the hedge fund managers and how successful they were. ray dalio at the top with $2 billion. i think james is right under him. $1.5 or $1.7 billion
and i think the question isn't that -- they're clearly massively successful and actually, they had pretty great years on a relative basis to people who had terrible years, given what took place in december but i think some people would look at that number, $2 billion number, right, and say, is that ultimately a good thing? and is, somehow, that a tax on the system, right? >> it's a zero sum game -- >> it's not a tax on the system. >> or if you're going to make that money, if it's not a taw on the system, should it get taxed in a different way >> well, look, you hear about the wealth of wealth, and we've always had it -- we had the vanderbilts, the carnegies, the mellons. and it was aspirational, the horatio alger story of our nation i started with nothing and worked very hard and this is an amazing country. you can do amazing things. equal opportunity. >> 100%. >> but this is also the most generous country on earth. we give away $400 billion or something like that a year bill gates is giving away $600
million a year to education reform i mean, we give away a lot of money. so, there is great value incredibly generous guy -- i don't know what happened to philanthropy if you took all the money away and would the middle class get the same amount of money i don't know how -- i don't know i don't know the answer. my feeling on capitalism, it needs to be regulated. it can't -- i think capitalism is like raising a child in the crib, right? you wouldn't have no guard rails on your crib the baby would fall off. you have to put guard rails. in canada, they don't have second mortgages you can regulate capitalism. you must regulate it otherwise, things like this could happen i didn't say that, did i >> i think sam zell, the groundbreaking sam zell, called something, a crock of shih tzu just use the dog shih tzu >> you watched or were influenced by it >> blame sam blame it on sam. should be a movie. more from barry still to come.
coming up, what's cooking at mcdonald's i don't know why -- yeah, there are kids -- you should hear my kids the company reporting better-than-expected quarterly earnings atidt get into what worked and wh dn'in the quarter with a top analyst when "squawk box" returns. ♪ can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you.
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kind of thought with the tax benefit, 3 cents above estimates. revenue's above expectations as well joining us now, will slaybei, analyst at stevens it's every quarter it's like we finally find out about same-store sales, domestically and internationally, and those were all pretty well above expectations, and in continuing with what really has been a pretty amazing turnaround with easterbrook since he came on board. >> yeah, it really is. and you look at those sales numbers that you mentioned in the u.s., 4.5%, that's a big number it's accelerating from the fourth quarter and from last year international, 6%. and that's on top of a lot of global macro worries and europe especially. and they called out the uk and france as being strong so, really, their formula's working across the board what's interesting here is, you know, its value, its indulgence. you look at what's working for mcdonald's they ran classics with bacon so bacon works for them,
doughnut sticks. so, it's not healthy eating, per se it's value and indulgence, on top of remodels that are helping to drive sales as well. >> we've talked about that a lot. fast, fresh. same old stuff you've always gotten, you know you don't need that crazy, molded, you know, pork product rib thing. you don't need that if you just get fresh burgers that you get quickly, right, and in a clean environment. >> i think that's exactly right. it's about speed it's about value and convenience. and mcdonald's is giving the customer what they want. you look back a few years ago, and they were trying a lot of different things and then the real turning point was whenever steve easterbrook, current ceo, put in all-day breakfast. it's what the customer wanted. they went back toward more sort of indulgent products, and that has worked in this quarter, i give them a lot of credit for shifting a lot of the marketing dollars back to the local co-ops who really did a good job with the breakfast when we checked with our franchise e-contacts, a lot of
them had slowed last year when they changed some things up. they gave the dollars back to local and breakfast we think accelerated a lot, and a lot of the traffic gains we saw this quarter i think came from breakfast. so, credit to them for giving more power to the franchisees to make those decisions. >> we've got to run, butgo they have french fries at 10:30. if you can get an egg mcmuffin at 3:00 p.m., you ought to get the fries at 10:30 >> one of the things we got some breaking news. occidental bid on buying anadarko you can add another name to the list of people who are competing. bershire hathaway. this is contingent on occi, here is the term oss of the deal. 100,000 shares of preferred stock comes with an 8% annual dividend the warrant purchase up to 80 million shares of occi at 62.50.
occidental share trading at 63.43. now the stock is up by about 6.5% there has been all sorts of concerns about occidental deal was for real or get the financing. >> it is expensive capital >> it is very expensive capital. it is kind of bershire's play book though. >> this is genius. >> bank of america you know we did have dwight scott on from black stone this morning. he was saying people have run from the credit there because they did not want to get involved in this thing this is $10 billion that goes straight wortowards it anadarko looks like it is up on this news. will chevron come in with a
higher offer or is this something that occidental will walk away with chevron share is up by 2%. we talked about it yesterday when you see chevron up, kind of solidify the idea that they don't think michael wirth coming back in the premium basin, they have been able to do a lot of scale that chevron has and it would be important to them. occidental thinks that's it is important for them breaking news on this is bershire hathaway is committed to invest in $10 billion going head and closing that deal let's get to jim cramer and see what he thinks of this deal and mcdonald's this morning. let's start with breaking news first. >> the gamover chevron is off the play.
and i salute her, maybe expensive capital, she knows what she's doing i know he's not going to pay up. you can say this one is finished and chevron is going to look for another player or chevron is going to say okay, there is berkshire. it is an amazing thing it snow boards how under value occi is. who knows the value better than wirth. >> right the deal he's getting ises the preferred stock of the common sense that he has a warrant on >> a lot of people felt, if vickie is paying too much, you don't want to give her a preferred deal either end. >> right >> there are a lot of people felt that she's paid too much and obviously if you think there
is good enough credit risk, you give them that deal. cheap capital and same time capital and endorsement. i think it is a side that it is a lot better >> what do you think of mcdonald's earnings? >> these comp numbers when you compare to what we got yesterday with burger king and wendy's, this is a small growth company this is a small cap company that puts the largest in the world. it is quite impressive these big operators are remarkable the bigger the operator the less they worry about labor cost. the bigger the operator, the more they use digital technology people working there can do it
easi easily people quietly doing a job that no one thought can do. he's very good you look at mastercard just great manager everywhere, frazier merck. chevron is 123 >> barry was with us today, one of the questions he made is how closely tied commercial real estate explain to jim >> 35% of all of the leasing in the united states coming from half a dozen of tech companies now. it is not that concentrated. the growth is from google and amazon and facebook and sales force and twitter and netflix. >> i think it is funny, google was the most proud battery, they're not using a lot of new power and putting up so many
buildings. you get it, of course, you get it it is hard to make money because everything costs so much >> yeah. the home builder, that business is really tough. land prices have gone up you don't see a lot of deregulation in land and zoning and improvements and the states that have been harder to build in, california remains hard to build in >> yeah, i am glad you point it out. the local guy really want to have some sort of rules, other than brooklyn, it does not matter, you can put any building in the world, you can rip the skyline. other than brooklyn, every in the world is hard to build >> great to see you. >> barry, you are the best, i love listening to you. >> we want to thank our guest hosts. >> we are leaving already? >> by the way, huge kudos to
nasdaq is off of 65 points s&p 500 off about 5 points make sure you join us tomorrow, "squawk on the street" begins right now. ♪ good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer, faber is at the global conference in california, another big day of coverage coming up over there home prices at the bottom of your scream. the futures are mixed, the nasdaq is going to get pinched by google revenue disappointment oil close to 65 anso